Intellectual property and its protection remain a sensitive and confusing topic for many companies, especially at the beginning of their business journey. Today, startups grow fast and transform into international enterprises. It complicates the matter as legislation systems vary depending on a region or a country. For example, while registering a trademark in the EU is relatively straightforward and covers 27 countries, the same process in the US can vary from state to state.
Despite all regional differences, there are universal aspects every startup should know about when concluding a software development contract focusing on intellectual property. Our experts summed up the most relevant points.
The Basics: What Is Intellectual Property?
Intellectual property (IP) is the authors’ temporary exclusive right and personal non-proprietary rights to the result of intellectual activity or means of individualization. As the result of creative activity, IP can take any form: a work of art, invention, computer program, trademark, or other commercial designation.
In the IT sector, IP is the core value. A startup may consist of 1–2 people with the only asset — an idea (partially embodied in the code). In today’s business environments, intellectual property has become a powerful instrument for attracting investments and generating profits.
It’s important to remember that any IP belongs to the first person who wrote the code or text or drew a design. Generally, it’s not a must to register the copyright separately. However, you must be able to prove the fact of creation. That’s why any employment contract implies “selling” those rights to use the author’s work but not the authorship.
Startup Intellectual Property Checklist
In the competitive landscape of innovation and technology, protecting your intellectual property is paramount to securing a competitive edge and long-term success. Our guide explains the essential steps, expert strategies, and legal insights necessary to navigate the complex world of IP.
#1 Contracts and NDAs
When outsourcing software development, the intellectual property matter becomes crucial. Any project must start with a properly designed contract and a well-specified non-disclosure agreement (NDA) with precise references to the working tools and channels that this NDA covers.
The more specific, the better. Abstract phrases that everything an employee does belongs to the company, in reality, have little legal value and can cause more complications. Besides, in many countries, proving that your NDA has been breached is difficult.
#2 Strict Communication Policy
Simply put, everything work-related should only be communicated through the official channels.
- Use exclusively working communication tools (Teams, Slack, Asana, ClickUp, etc.) for correspondence. Messengers for private use allow users to forward any information in two clicks but fall under personal data protection regulations. It will hinder proving the fact of sharing in case of a dispute.
- Only allow access to working tools through corporate email. For example, if you send access to critical information to an employee’s personal email, it stays there. You may not be able to prove it belongs to your company.
- Keep the history of the entire development process in one place with a clear structure. In most cases, it’s enough to prove your property rights.
- Administer and define the access rights in all working tools. Consider strict separation of rights at different levels: teams, micro-teams, and positions. Shared access may cause a lot of damage.
- Be careful with Google Drive and similar services when handling sensitive information that needs higher levels of protection. Although they are convenient collaboration tools, they also pose potential risks of leaking data and often become the target of hacker attacks.
By clearly outlining guidelines and expectations, a strict communication policy establishes a culture of awareness and discretion, ensuring that sensitive information remains confidential within the team. This proactive approach minimizes the risk of accidental leaks or unauthorized disclosures, safeguarding the startup’s unique ideas and innovations, and positioning it as a trustworthy and reliable player in the market.
#3 Additional Agreements and Clear Terms of Reference
Separate agreements for each type of work can level up your intellectual property contract. Some companies even sign a contract with each employee for each monthly sprint. However, in most cases, a detailed report of completion indicating the fulfilled tasks is sufficient.
Each type of work also requires clear and elaborate terms of reference. This document is already a checklist recording the fact of your non-disclosure agreement.
#4 Country of Company Registration
Indeed, it’s better to register a company in the jurisdiction with a scrupulous attitude towards intellectual property. Today, opening multiple offices worldwide is common practice for many businesses. The International Property Rights Index gives a good overview of regions and separate countries.
#5 Intellectual Property Protection Types
Any IP checklist in a custom software development environment would be incomplete without covering this vital aspect. Generally, there are four main types of IP protection.
- Trade Secrets.
In many countries, software (computer programs and databases) is an object of copyright and is equated with literary works. Although copyright is automatic, you can register software rights with a code signing certificate (software code protection certificate). Such a certificate can be conditionally called a software patent. If a legal dispute occurs, the registered code becomes the subject of examination.
|❕ Why is it important?|
Imagine, you register your MVP code, present the product to investors (or launch it), and then discover that your competitor has created a product that looks suspiciously similar to yours.
If the examination shows that the code of both products is the same, the certificate will allow you to defend your rights to it and prohibit the competitor from using it.
Besides, it simply helps owners sell the rights to a product or software. Serious investors are unlikely to make a deal if the seller doesn’t have it registered.
What IT Solutions Can Be Patented?
- Software products.
- Interfaces as a way to interact with the user.
- Database management systems.
- Mobile applications.
- Geolocation programs.
- Networking games.
- Search engines.
- Electronic payment systems.
- Neural networks and artificial intelligence.
- Mining farms.
Often, intellectual property protection turns into a battle between employees and management. Software development agreements with outsourcing companies may complicate the matter even more. That’s why it’s essential to not only understand the mechanisms of IP protection but also find a trustworthy tech partner interested in your success. Moreover, without mutual understanding, these procedures may become meaningless.
One of our core expertise fields is process building. IP software development best practices are a vital part of our operations and workflow. On top of that, we provide compliance consulting services while guiding our Partners throughout the project’s every stage.
FAQ: Intellectual Property Checklist for Startup Founders
Q1: What is intellectual property (IP)?
Intellectual property refers to legal rights protecting creations of the mind, such as inventions, designs, trademarks, and creative works.
Q2: Why is intellectual property important for startup founders?
Intellectual property provides a competitive edge, safeguards innovations, and allows startup founders to monetize their ideas, attract investors, and build a strong brand.
Q3: What are the different types of intellectual property?
The main types of intellectual property are patents (for inventions), trademarks (for brands and logos), copyrights (for creative works), and trade secrets (confidential information).
Q4: How can I protect my startup’s intellectual property?
To protect your intellectual property, consider filing for patents, registering trademarks, implementing confidentiality agreements, and using copyright notices for your creative works.
Q5: When should I start considering intellectual property protection for my startup?
It’s advisable to consider intellectual property protection early in the startup process, ideally before publicly disclosing or launching your product or service.
Q6: How can I ensure I’m not infringing on someone else’s intellectual property?
Conduct thorough research to check for existing patents, trademarks, and copyrights that may conflict with your startup’s ideas or products. Consulting with an intellectual property attorney is recommended for a comprehensive analysis.
Q7: What steps can I take to protect my startup’s trade secrets?
Safeguard your trade secrets by implementing strict access controls, non-disclosure agreements (NDAs) with employees and partners, and maintaining clear policies regarding the handling of confidential information.
Q8: Can I use open-source software in my startup without infringing on intellectual property?
Open-source software licenses can vary, so it’s essential to understand the specific terms and conditions of the license. Adhering to the license requirements and respecting the intellectual property rights of others is crucial.
Q9: What are the benefits of conducting a trademark search before finalizing my startup’s name?
Conducting a trademark search helps identify potential conflicts with existing trademarks, reducing the risk of infringement claims and the need for rebranding in the future.
Q10: What should I do if I suspect someone is infringing on my startup’s intellectual property?
If you suspect infringement, consult with an intellectual property attorney to assess the situation and explore legal options, such as sending cease-and-desist letters or filing a lawsuit to protect your rights.